Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Indoco Remedies- Muted margins…
Indoco’s Q3FY11 sales increased 19.4% to | 114.3 crore in line with our
expectation of | 117 crore mainly driven by growth in formulation
exports and the domestic API business. However, at the EBITDA level,
margins were subdued at 12.7%, below our expectation of 15.1% due to
change in the product mix, increase in raw materials cost and fall in
realisation due to currency fluctuation. Increase in the taxation YoY
restricted the net profit growth to 14% to | 8.8 crore. We believe the
domestic formulation business will be normalised in due course. We
also expect a couple of products to be launched in semi-regulated
markets in Q4FY11. We have maintained our BUY rating on the stock.
ƒ Highlights of quarter
The domestic formulation business increased marginally as the antiinfective and respiratory segments witnessed de-growth. Also, in the
domestic market, Indoco launched a new product Warren-Snowdent
dental cream. The company filed eight product registrations in semiregulated markets and plans to commercialise these from Q4FY11. It also
extended the earlier deal with Aspen. Aspen will now market products
developed by Indoco to Europe and Australia besides South Africa.
Indoco has signed an agreement with Spain-based CRO Company to
conduct a bio study in Europe for an anti-diabetic drug. The registration of
products in Cameroon is on the verge of completion and commercial
despatches will start in the next quarter.
Valuation
We expect sales and profits of Indoco to grow at a CAGR of 21.4% and
22.9% between FY10 and FY13E, respectively. Sales would be driven by
both the domestic (CAGR of ~16%) and international formulation
business (CAGR of ~22%). Sales from the Aspen deal (to start in FY12)
and Watson deal (to start in FY13) will improve the sales although low
margins and return ratios will be overhangs for the multiple. The stock
is trading at | 460 i.e. 7.2x FY13E EPS of | 63.9. We have valued the
stock at | 511 i.e. 8x FY13E EPS.
ƒ Formulation exports drive topline growth
Indoco Remedies’ sales increased 19.4% to | 114.31 crore in line with our
expectation of | 117 crore on the back of impressive growth in
formulation exports and the domestic API business. The domestic
formulation business registered a marginal growth of 11% to | 74 crore
as anti-infective and respiratory segments witnessed de-growth. Indoco
launched a new product, Warren-Snowdent dental cream in the domestic
market.
The combined effect of the 28% rise in sales to regulated markets and
62% growth in semi-regulated market resulted in a ~35% YoY growth in
international formulations to | 33.6 crore. On a constant currency basis,
the growth was 41%. Indoco has filed eight product registrations in semiregulated markets and plans to commercialise these from Q4FY11. The
registration of products in Cameroon is expected to be complete shortly
and commercial despatches will start in the next quarter. The total API
business increased 60% to | 6.7 crore mainly driven by the domestic API
business.
Indoco and US-based Zumanta have signed a development deal in the
dermatology segment. Under the deal, Indoco will utilise its development
strengths in the dermatology segment while the US partner will take care
of the clinical and regulatory requirements. The product will be marketed
and distributed by Zumanta and will be supplied from Indoco’s
manufacturing facility in Goa.
Indoco has extended its earlier deal with Aspen. Aspen will now market
products developed by Indoco to Europe and Australia beside South
Africa. The company has also signed an agreement with Spain-based
CRO Company to conduct a bio-study in Europe for an anti-diabetic drug.
ƒ EBITDA margins up 70 bps
EBITDA margins were up by 70 bps to 12.7%, far below our expectation
of 15.1% mainly due to a change in the product mix and increase in raw
materials cost by ~ 120 bps to 45% (as percentage of sales). EBITDA
increased by 26.8% to | 14.5 crore.
ƒ Net profit grows 14% YoY
Net profit growth was restricted to 14% at | 8.81 crore on higher tax
provision and depreciation during the quarter. During the quarter, Indoco
has not booked any tax credit resulting in higher tax provision of | 1.7
crore compared to a mere | 0.07 crore in Q3FY10.
Valuation
We expect the sales and profits of Indoco to grow at a CAGR of 21.4%
and 22.9% between FY10 and FY13E, respectively. Sales would be driven
by both the domestic formulations (CAGR of ~16%) and international
formulations business (CAGR of ~22%). Sales from the Aspen deal (to
start in FY12) and Watson deal (to start in FY13) will improve the sales,
although low margins and return ratios will be overhangs for the multiple.
The stock is trading at | 460 i.e. 7.2x FY13E EPS of | 63.9. We have valued
the stock at | 511 i.e. 8x FY13E EPS.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Indoco Remedies- Muted margins…
Indoco’s Q3FY11 sales increased 19.4% to | 114.3 crore in line with our
expectation of | 117 crore mainly driven by growth in formulation
exports and the domestic API business. However, at the EBITDA level,
margins were subdued at 12.7%, below our expectation of 15.1% due to
change in the product mix, increase in raw materials cost and fall in
realisation due to currency fluctuation. Increase in the taxation YoY
restricted the net profit growth to 14% to | 8.8 crore. We believe the
domestic formulation business will be normalised in due course. We
also expect a couple of products to be launched in semi-regulated
markets in Q4FY11. We have maintained our BUY rating on the stock.
ƒ Highlights of quarter
The domestic formulation business increased marginally as the antiinfective and respiratory segments witnessed de-growth. Also, in the
domestic market, Indoco launched a new product Warren-Snowdent
dental cream. The company filed eight product registrations in semiregulated markets and plans to commercialise these from Q4FY11. It also
extended the earlier deal with Aspen. Aspen will now market products
developed by Indoco to Europe and Australia besides South Africa.
Indoco has signed an agreement with Spain-based CRO Company to
conduct a bio study in Europe for an anti-diabetic drug. The registration of
products in Cameroon is on the verge of completion and commercial
despatches will start in the next quarter.
Valuation
We expect sales and profits of Indoco to grow at a CAGR of 21.4% and
22.9% between FY10 and FY13E, respectively. Sales would be driven by
both the domestic (CAGR of ~16%) and international formulation
business (CAGR of ~22%). Sales from the Aspen deal (to start in FY12)
and Watson deal (to start in FY13) will improve the sales although low
margins and return ratios will be overhangs for the multiple. The stock
is trading at | 460 i.e. 7.2x FY13E EPS of | 63.9. We have valued the
stock at | 511 i.e. 8x FY13E EPS.
ƒ Formulation exports drive topline growth
Indoco Remedies’ sales increased 19.4% to | 114.31 crore in line with our
expectation of | 117 crore on the back of impressive growth in
formulation exports and the domestic API business. The domestic
formulation business registered a marginal growth of 11% to | 74 crore
as anti-infective and respiratory segments witnessed de-growth. Indoco
launched a new product, Warren-Snowdent dental cream in the domestic
market.
The combined effect of the 28% rise in sales to regulated markets and
62% growth in semi-regulated market resulted in a ~35% YoY growth in
international formulations to | 33.6 crore. On a constant currency basis,
the growth was 41%. Indoco has filed eight product registrations in semiregulated markets and plans to commercialise these from Q4FY11. The
registration of products in Cameroon is expected to be complete shortly
and commercial despatches will start in the next quarter. The total API
business increased 60% to | 6.7 crore mainly driven by the domestic API
business.
Indoco and US-based Zumanta have signed a development deal in the
dermatology segment. Under the deal, Indoco will utilise its development
strengths in the dermatology segment while the US partner will take care
of the clinical and regulatory requirements. The product will be marketed
and distributed by Zumanta and will be supplied from Indoco’s
manufacturing facility in Goa.
Indoco has extended its earlier deal with Aspen. Aspen will now market
products developed by Indoco to Europe and Australia beside South
Africa. The company has also signed an agreement with Spain-based
CRO Company to conduct a bio-study in Europe for an anti-diabetic drug.
ƒ EBITDA margins up 70 bps
EBITDA margins were up by 70 bps to 12.7%, far below our expectation
of 15.1% mainly due to a change in the product mix and increase in raw
materials cost by ~ 120 bps to 45% (as percentage of sales). EBITDA
increased by 26.8% to | 14.5 crore.
ƒ Net profit grows 14% YoY
Net profit growth was restricted to 14% at | 8.81 crore on higher tax
provision and depreciation during the quarter. During the quarter, Indoco
has not booked any tax credit resulting in higher tax provision of | 1.7
crore compared to a mere | 0.07 crore in Q3FY10.
Valuation
We expect the sales and profits of Indoco to grow at a CAGR of 21.4%
and 22.9% between FY10 and FY13E, respectively. Sales would be driven
by both the domestic formulations (CAGR of ~16%) and international
formulations business (CAGR of ~22%). Sales from the Aspen deal (to
start in FY12) and Watson deal (to start in FY13) will improve the sales,
although low margins and return ratios will be overhangs for the multiple.
The stock is trading at | 460 i.e. 7.2x FY13E EPS of | 63.9. We have valued
the stock at | 511 i.e. 8x FY13E EPS.
No comments:
Post a Comment